From the Highlander wiki:
Sterility is one of the main characteristics of Immortals. When female Immortals are pre-Immortal, they menstruate just like other women. After they become Immortal, however, they don't. This is because of the spontaneous healing qualities of the Quickening. The blood and tissue lining of the womb is unable to form, because the tiny blood vessels that supply it are unable to rise to the surface and open up. Also, ovulation is impossible, because the ovaries are also affected by the Quickening. A pre-Immortal woman can't have children because the Quickening is so strong and concentrated, even before the onset of pure Immortality, the ovaries are unable to release the ova.
Information about male sterility is bit more ambiguous:
Male Immortals are sterile because the concentration of the Quickening interferes with the mitochondria in the sperm cells. The mitochondria are the things that give the sperm energy. The Quickening increases their energy to such a degree that it destroys the enzyme on the head of the sperm, making them unable to penetrate an egg cell to fertilize it.
Which (as the OP pointed) doesn't say directly about fertility of pre-immortals.
It seems that in the original script immortals in general were supposed to be able to have children (quote thanks to @Richard)
I have served in the armies of
twelve nations, married nine
women, fathered thirty-eight
children and buried them all.
but it was removed from the movie and has been replaced with sterility.
Now regarding the Masamune question: if indeed pre-immortal males can have children then he could father a daughter, die violently, became immortal, spent 2000 years hiding in a cave (or simply not make a single sword) and resurface again in 14th century just to became famous, but I still find it highly unlikely since it takes too many assumptions.